Discover Credit Card: 0% APR on Balance Transfer
Author: chrys
Posted: Sat Aug 13, 2005 2:14 pm
Post subject: Discover Credit Card: 0% APR on Balance Transfer
I got a mail offer with the above offer from Discover and from reading the fine print I find that:
- 0% on purchases until May 2006 and then 9.49%
- 0% on BT until May 2006 but may be extended indefinitely as long as you make 3 purchases per month starting May 2006.
- no min dollar amount on purchases specified in offer
- no min financial service charge specified in offer but there probably is one
Granted, starting May 2006 you have to start making purchases and since payments are credited to lower interest category first (ie, BT) the purchases are going to accrue at 9.49% monthly plus min financial charge.
This seem too good to be true. I would make small purchases totaling no more than $5-$10 per month and probably still come out way ahead in total interest changes if I moved my Capital One 5.9% Fixed for life to Discover.
Can anyone see any pitfalls in this offer?
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Author: nativechild48
Posted: Sat Aug 13, 2005 3:24 pm
Post subject: Discover Credit Card: 0% APR on Balance Transfer
Not good to make purchases on accts. that you BT on, as your purchases get paid for last. Discover uses a two cycle method for apr., and the variable can be changed anytime. If you do not make purchases then the int. rate will not stay zero. All creditors can invoke the universal default clause at will, and part of what they want is you to commit to using the acct. for purchases and BT's.
Author: maddybeagle
Posted: Sat Aug 13, 2005 4:39 pm
Post subject: Discover Credit Card: 0% APR on Balance Transfer
Agreed that this isnt a good offer. I ran a spreadsheet on this doesnt take very long to turn into a bad deal. I think the offer that I saw, you had to put a min. 50 bucks a month on and the money you pay on the bill gets to pay down the lower rate balance, so bad idea. They used to allow it to have just one purchase a month and folks were just getting a pack of gum at the gas station. I guess discover caught on. You are better off, just transferring to another card.
Author: Daniel
Posted: Sat Aug 13, 2005 5:24 pm
Post subject: Discover Credit Card: 0% APR on Balance Transfer
Done right this is a smoking deal.
Because the required purchases are finite the best returns would be achieved with the maximum credit line; they will go a little above $20K without financials.
Assuming you make 3 $1 purchases per month and there is a 50 cent per month minimum finance charge, it would be years before your interest charges were significant at all.
Making a 2% minimum payment +$1 one could extend the offer for over 15 years while at the same time your paying interest on a total of $540 @ 9.49% you will have paid $654 in interest - more if the APR increases.
This type of deal requires discipline to make the required purchases and is best achieved by some type of automatic billing unless you can remember to make 3 $1 gas purchases per month.
The other caveats are making your required purchases at the beginning of the new billing cycle to avoid any slow charge postings costing you the deal and making sure your payments are all made on time.
So potentially it could cost you only $654 in interest because you got value out of the $540 in purchases, if you even did $10,000 over 15 years that’s less than 1 % in interest when you allow for the time horizon
All of this being said , I doubt that Discover would not change the terms somewhere up the road, before they allowed it to go to that length of time and you should always be prepared for this but other than that it is still a hot cheap money deal.
IMHO Go for it.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Posted: Sat Aug 13, 2005 2:14 pm
Post subject: Discover Credit Card: 0% APR on Balance Transfer
I got a mail offer with the above offer from Discover and from reading the fine print I find that:
- 0% on purchases until May 2006 and then 9.49%
- 0% on BT until May 2006 but may be extended indefinitely as long as you make 3 purchases per month starting May 2006.
- no min dollar amount on purchases specified in offer
- no min financial service charge specified in offer but there probably is one
Granted, starting May 2006 you have to start making purchases and since payments are credited to lower interest category first (ie, BT) the purchases are going to accrue at 9.49% monthly plus min financial charge.
This seem too good to be true. I would make small purchases totaling no more than $5-$10 per month and probably still come out way ahead in total interest changes if I moved my Capital One 5.9% Fixed for life to Discover.
Can anyone see any pitfalls in this offer?
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
Author: nativechild48
Posted: Sat Aug 13, 2005 3:24 pm
Post subject: Discover Credit Card: 0% APR on Balance Transfer
Not good to make purchases on accts. that you BT on, as your purchases get paid for last. Discover uses a two cycle method for apr., and the variable can be changed anytime. If you do not make purchases then the int. rate will not stay zero. All creditors can invoke the universal default clause at will, and part of what they want is you to commit to using the acct. for purchases and BT's.
Author: maddybeagle
Posted: Sat Aug 13, 2005 4:39 pm
Post subject: Discover Credit Card: 0% APR on Balance Transfer
Agreed that this isnt a good offer. I ran a spreadsheet on this doesnt take very long to turn into a bad deal. I think the offer that I saw, you had to put a min. 50 bucks a month on and the money you pay on the bill gets to pay down the lower rate balance, so bad idea. They used to allow it to have just one purchase a month and folks were just getting a pack of gum at the gas station. I guess discover caught on. You are better off, just transferring to another card.
Author: Daniel
Posted: Sat Aug 13, 2005 5:24 pm
Post subject: Discover Credit Card: 0% APR on Balance Transfer
Done right this is a smoking deal.
Because the required purchases are finite the best returns would be achieved with the maximum credit line; they will go a little above $20K without financials.
Assuming you make 3 $1 purchases per month and there is a 50 cent per month minimum finance charge, it would be years before your interest charges were significant at all.
Making a 2% minimum payment +$1 one could extend the offer for over 15 years while at the same time your paying interest on a total of $540 @ 9.49% you will have paid $654 in interest - more if the APR increases.
This type of deal requires discipline to make the required purchases and is best achieved by some type of automatic billing unless you can remember to make 3 $1 gas purchases per month.
The other caveats are making your required purchases at the beginning of the new billing cycle to avoid any slow charge postings costing you the deal and making sure your payments are all made on time.
So potentially it could cost you only $654 in interest because you got value out of the $540 in purchases, if you even did $10,000 over 15 years that’s less than 1 % in interest when you allow for the time horizon
All of this being said , I doubt that Discover would not change the terms somewhere up the road, before they allowed it to go to that length of time and you should always be prepared for this but other than that it is still a hot cheap money deal.
IMHO Go for it.
CardRatings.com is the most comprehensive source for comparing credit card offers. Please visit CardRatings.com to view the best rated credit cards!
posted by CardRatings.com at 10:29 AM
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